Babson Growth Fund
Annual Report
June 30, 1995
MESSAGE
To Our Shareholders
The U.S. stock market extended its rapid advance in the quarter ended
June 30, 1995, taking many investors by surprise. Strong corporate earnings
have been the main driver of this growth, along with lower levels of interest
rates and the lack of any significant inflation. The large, multinational
companies have dramatically outperformed the rest of the market this year,
and have been aided by a broad economic recovery in Europe, a weak dollar
versus the German mark and Japanese yen and rapid economic growth in many
emerging markets.
Technology stocks have also been a pocket of strength this year, with that
sector of the unmanaged Standard & Poor's 500 index of larger companies
increasing by 38.1% in the first half of the year (including capital
appreciation and dividends). This compares with a 20.1% total return for the
entire unmanaged S&P 500 index in the same time period, and a return of 14.4%
for the unmanaged Russell 2000 index (a proxy for performance of smaller
companies).
Babson Growth Fund had a 7.7% total return in the second quarter (price
change and reinvested distributions) and has returned 20.2% over the past 12
months. At quarter-end the net asset value per share was $13.43.
Investment Results - Total Return
Periods Ended 6/30/95
3 mos. 6 mos. 12 mos.
BABSON GROWTH FUND 7.7% 17.0% 20.2%
Lipper Growth Funds Average
(615 funds) 9.3% 17.5% 22.2%
S&P 500 Index* 9.5% 20.1% 26.0%
*unmanaged
During the latest fiscal year the Fund paid ordinary income dividends of $.18
per share and realized capital gains of $.5345 per share. For our corporate
shareholders, 100% of the ordinary income distributions qualify for the
corporate dividends received deduction.
We are always looking for new opportunities for Babson Growth Fund, and made
one new investment in Pep Boys during the second calendar quarter. Pep Boys
is a major retailer of automotive parts and accessories, and also provides
automotive maintenance and service through more than 400 stores in 29 states.
In this same time period we eliminated investments in American Greetings and
U.S. HealthCare.
We continue to focus on high quality, rapidly growing companies in Babson
Growth Fund. Our emphasis on the relative valuations of these stocks
differentiates the Fund from many other growth mutual funds, and has become
increasingly important in our effort to preserve capital at a time when the
stock market is entering unchartered territories at all-time highs.
We appreciate your continued interest in Babson Growth Fund.
Sincerely,
LARRY D. ARMEL
Larry D. Armel
President
<PAGE>
ECONOMIC AND PORTFOLIO REVIEW
Babson Growth Fund is a no-load mutual fund invested in a diversified list of
common stocks selected for their long-term possibilities of both capital and
income growth. It was founded particularly for those investors who believe in
the Fund's fundamental investment policy and who wish to receive, through
ownership of the Fund's shares, continuous portfolio supervision by the staff
of David L. Babson & Co. Inc.
In the first half of 1995, stocks rose nearly 20% - a large increase for
such a brief time. As is usually the case, the big move in stock prices so
far this year was totally unexpected.
Specific economic and financial developments
triggered the market move and investors reacted with abandon. Such responses
reflect the old bandwagon psychology: when the music is playing loudly, happy
or sad, and the bandwagon is rolling down the street, everyone wants to climb
aboard. Eventually, of course, the music stops for a while. Then people jump
off the bandwagon and investors' evaluation of the market becomes based more
on reason than emotion.
Recoveries from bear market lows typically average
25-30% and since 1960, several have exceeded 40%. However, when the market
is already near an all-time high, jumps of 20%-plus in just half a year are
infrequent. As shown, in the past 35 years there have been only seven bull
market advances of six months' duration that exceeded 15%.
6 Month Bull Market Advances
Exceeding 15%
Source: David L. Babson & Co. Inc.
Looking back over the first half of 1995, we can see a number of reasons for
the strength in the stock market. First, confounding just about all
forecasters, interest rates have dropped sharply _ generally more than 1-1/2
percentage points on intermediate and long-term bonds. This has made bonds
less attractive values and has steered more new buying into the stock market.
Second, earnings gains for the first quarter were stronger than most observers
expected. With economic expansion decelerating in the second quarter, growth
of corporate profits slowed. Still, at this point 1995 earnings estimates for
many companies are higher than they were at the beginning of the year.
Third, the "Republican Revolution" in Washington has stimulated hopes for
decreases in burdensome federal regulation, taxes and deficits. How far such
shifts will go is still uncertain, but with the President recently weighing
in on the side of deficit reduction, there is a growing possibility that the
level of federal red ink will shrink substantially in the next few years.
This will free up more private savings for productive capital investment and
that could be very beneficial to the U.S. economy in the long run.
Fourth, aided by a further decline in the value of the dollar and continued
efforts to improve efficiency, the competitive position of American companies
in the world economy has grown even stronger.
These favorable factors have sparked continued active stock buying by
individuals through equity mutual funds. Reports on mutual fund activity
through July showed no slackening in the rapid flow of cash into stock funds.
Sometime in the next few years, there will be an unexpected negative
development in the economic, financial or political arena that will cool the
ardor of investors temporarily. But as this summer progresses, the bandwagon
is still rolling merrily along.
With the stock market in new high territory and both the Standard & Poor's
500 and the Dow Jones Industrial Average selling at five times their levels
of 13 years ago (when the current bull market started), it's natural to ask
whether it is too late now to continue buying stocks.
In our view, the simple answer is maybe yes for the short run but definitely
no for the long-term. Our reasoning involves many factors which can be
analyzed objectively but even the most logical analysis cannot give
precise answers - because unpredictable events do occur in the economy and
the stock market, and they can derail long-term trends for some period of
time.
The long-term growth of earnings and dividends are the two factors which
inevitably push stock prices higher. These trends are particularly important
for this Fund, whose primary objective is to invest in high quality companies
which have superior prospects for long-term earnings and dividend growth.
Even if the next few years are sub-par for the stock market, there is every
reason to believe the long-term trend will remain favorable. We shouldn't
worry too much about the unanswerable question as to whether this is a good
time, from a short-term standpoint, to buy stocks.
David L. Babson & Co. Inc.
<TABLE>
The Fund's Ten Largest Holdings
<CAPTION>
OWNED BY PERCENT
1995 1994 THE FUND MARKET OF S&P
RANK RANK COMPANY SINCE VALUE PORTFOLIO RANKING
<S> <C> <C> <C> <C> <C> <C>
1 1 Computer Sciences Corp. 1988 $8,531,250 3.45% B+
2 3 Boeing Co. 1992 7,828,125 3.17% A
3 19 Johnson & Johnson 1974 6,762,500 2.73% A+
4 4 General Re Corp. 1990 6,693,750 2.71% A
5 20 Capital Cities/ABC, Inc. 1991 6,480,000 2.62% A
6 6 Automatic Data Processing, Inc. 1990 6,287,500 2.54% A+
7 2 King World Productions, Inc. 1989 6,075,000 2.46% B+
8 24 Philip Morris Cos., Inc. 1989 5,950,000 2.41% A+
9 21 American Home Products Corp. 1990 5,803,125 2.35% A+
10 10 Wallace Computer Services, Inc. 1989 5,756,250 2.33% A
David L. Babson Growth Fund versus S & P and Value Line
*Unmanaged stock index
</TABLE>
Babson Growth Fund's average annual compounded total returns for one, five
and ten year periods ended June 30, 1995, were 20.23%, 9.70% and 12.13%,
respectively. Performance data contained in this report is for past periods
only. Past performance is not predictive of future performance. Investment
return and share value will fluctuate, and redemption value may be more or
less than original cost.
<PAGE>
HISTORICAL RECORD
<TABLE>
Progress of the Fund since it was founded in 1960.
<CAPTION>
net asset
net asset value per
*long-term *short-term value per share with
FISCAL net *ordinary capital capital share with dividends and
YEAR TOTAL ASSET INCOME GAINS GAINS CAPITAL GAINS CAPITAL GAINS
ended net value dividends distributions distributions distributions distributions
June 30 assets per share per share per share per share reinvested reinvested
<S> <C> <C> <C> <C> <C> <C> <C>
1960 $ 128,066 $ 4.87 $ _0_ $ _0_ $ _0_ $ 4.87 $ 4.87
1965 5,176,041 6.36 0.100 0.07 _0_ 6.52 6.97
1970 28,729,379 7.16 0.170 0.02 _0_ 7.63 8.87
1971 54,672,327 9.60 0.190 _0_ _0_ 10.23 12.15
1972 77,860,344 10.90 0.180 _0_ _0_ 11.62 14.05
1973 106,017,401 10.66 0.160 0.09 _0_ 11.46 14.05
1974 143,011,492 9.34 0.200 _0_ _0_ 10.04 12.54
1975 207,734,395 10.22 0.220 _0_ _0_ 10.99 14.09
1976 224,727,885 10.00 0.250 _0_ _0_ 10.75 14.16
1977 217,273,868 9.27 0.240 _0_ _0_ 9.97 13.46
1978 217,114,139 9.40 0.280 _0_ _0_ 10.11 14.06
1979 218,528,345 10.20 0.320 _0_ _0_ 10.97 15.76
1980 234,348,577 11.25 0.390 _0_ _0_ 12.08 18.01
1981 281,980,936 12.74 0.410 _0_ _0_ 13.68 21.04
1982 205,749,921 9.67 0.440 0.79 _0_ 11.24 17.97
1983 249,201,722 14.40 0.380 0.19 0.04 16.96 27.97
1984 208,290,661 10.85 0.380 1.615 _0_ 14.68 24.91
1985 215,374,722 13.40 0.4025 1.6285 0.2225 18.14 31.36
1986 253,780,848 13.62 0.3525 1.3725 _0_ 22.89 42.37
1987 288,727,782 16.25 0.305 1.29 0.005 28.45 53.43
1988 237,465,629 11.66 0.2925 2.3425 _0_ 26.09 50.10
1989 266,125,877 11.87 0.3085 1.20 0.0965 29.38 58.38
1990 259,076,870 11.18 0.2725 1.125 0.01 30.36 62.04
1991 235,812,697 11.05 0.245 0.18 _0_ 30.55 63.92
1992 232,400,994 11.70 0.20 0.025 0.011 32.45 69.10
1993 245,201,417 12.30 0.195 0.865 _0_ 36.49 78.97
1994 227,724,061 11.78 0.20 0.7931 _0_ 37.28 81.97
1995 247,282,420 13.43 0.18 0.5345 _0_ 44.19 98.55
</TABLE>
* Includes dividends and distributions applicable to the fiscal year
which may have been paid soon after the fiscal year-end.
<PAGE>
STATEMENT OF NET ASSETS
June 30, 1995
S&P
RANKING** SHARES COMPANY COST MARKET VALUE
COMMON STOCKS - 99.33%
BASIC MATERIALS - 5.15%
A 50,000 Air Products & Chemicals, Inc. $ 1,233,900 $ 2,787,500
B+ 80,000 duPont (E.I.) deNemours & Co. 3,101,860 5,500,000
B+ 15,000 Louisiana Pacific Corp. 622,980 393,750
B+ 30,000 Morton International, Inc. Industry 605,084 877,500
A+ 65,000 Sigma-Aldrich Corp. 3,103,750 3,193,125
8,667,574 12,751,875
CAPITAL GOODS - 12.30%
A 125,000 Boeing Co. 5,610,250 7,828,125
A+ 90,000 General Electric Co. 2,446,945 5,073,750
A 45,000 Grainger (W.W.), Inc. 2,445,830 2,643,750
A 200,000 Pall Corp. 3,499,878 4,450,000
A 150,000 Sherwin-Williams Co. 4,142,375 5,343,750
B 85,000 Sundstrand Corp. 2,242,062 5,078,750
20,387,340 30,418,125
CONSUMER CYCLICAL - 21.82%
A 60,000 Capital Cities/ABC, Inc. 2,772,720 6,480,000
A 150,000 Circuit City Stores, Inc. 1,645,125 4,743,750
A+ 90,000 Dillard Department Stores,
Inc. Cl. A 1,983,690 2,643,750
A+ 37,500 Genuine Parts Co. 939,925 1,420,313
A+ 150,000 Heilig-Meyers Co. 3,719,906 3,825,000
B+ 150,000 King World Productions, Inc.* 2,561,703 6,075,000
B 140,000 Mattel, Inc. 2,893,302 3,640,000
A+ 60,000 May Department Stores Co. 2,131,800 2,497,500
A+ 90,000 Pep Boys-Manny, Moe & Jack 2,495,589 2,407,500
B+ 60,000 Reader's Digest Association,
Inc., Cl. A 2,464,356 2,647,500
B+ 150,000 Reebok International Ltd. 2,940,970 5,100,000
A- 125,000 Service Corp., International 2,148,125 3,953,125
NR 120,000 Viking Office Products, Inc.* 3,390,650 4,395,000
B 75,000 Whirlpool Corp. 1,953,875 4,125,000
34,041,736 53,953,438
CONSUMER STAPLES - 21.79%
A+ 130,000 Abbott Laboratories 3,143,275 5,265,000
A+ 75,000 American Home Products Corp. 3,717,855 5,803,125
A+ 100,000 Anheuser-Busch Cos., Inc. 1,312,715 5,687,500
A- 75,000 Bausch & Lomb, Inc. 3,491,051 3,112,500
A+ 65,000 CPC International, Inc. 3,171,847 4,013,750
B+ 93,000 DENTSPLY International, Inc. 2,969,680 3,348,000
A 80,000 Gillette Co. 2,482,720 3,570,000
B 24,000 Healthsource, Inc.* 837,435 840,000
A+ 100,000 Johnson & Johnson 596,921 6,762,500
A+ 100,000 PepsiCo, Inc. 3,254,300 4,562,500
A+ 80,000 Philip Morris Cos., Inc. 348,971 5,950,000
NR 90,000 Scherer (R.P.) Corp.* 4,242,301 3,802,500
B 28,000 United Healthcare 1,264,555 1,158,500
30,833,626 53,875,875
ENERGY - 8.41%
B- 80,000 Amerada Hess Corp. 2,847,670 3,910,000
NR 80,000 Burlington Resources, Inc. 1,104,279 2,950,000
B+ 140,000 Coastal Corp. 2,827,398 4,252,500
B+ 50,000 Mobil Corp. 1,470,150 4,800,000
A 40,000 Royal Dutch Petroleum Co. 879,100 4,875,000
9,128,597 20,787,500
FINANCIAL - 16.16%
A+ 50,000 American International Group, Inc. 2,002,319 5,700,000
A+ 103,125 Banc One Corp. 1,533,349 3,325,781
NR 62,000 Federal Home Loan Mortgage Corp. 3,241,171 4,262,500
NR 65,000 First Data Corp. 3,409,513 3,696,875
B+ 24,700 First Financial Management Corp. 1,763,982 2,111,850
A 50,000 General Re Corp. 4,081,235 6,693,750
A+ 135,562 KeyCorp New 2,148,471 4,253,258
B- 120,000 Mellon Bank Corp. 4,454,000 4,995,000
A- 100,000 St. Paul Cos., Inc. 2,262,500 4,925,000
24,896,540 39,964,014
TECHNOLOGY - 13.70%
A+ 100,000 Automatic Data Processing, Inc. 2,483,095 6,287,500
B+ 150,000 Computer Sciences Corp.* 2,218,600 8,531,250
A+ 80,000 Minnesota Mining & Manufacturing Co. 3,589,820 4,580,000
B 111,000 Seagate Technology* 2,821,730 4,356,750
NR 115,000 Vodafone Group PLC ADR 3,564,820 4,355,625
A 150,000 Wallace Computer Services, Inc. 3,377,764 5,756,250
18,055,829 33,867,375
TOTAL COMMON STOCKS - 99.33% 146,011,242 245,618,202
TOTAL INVESTMENTS - 99.33% $ 146,011,242 245,618,202
Other assets less liabilities - 0.67% 1,664,218
TOTAL NET ASSETS - 100.00%
(equivalent to $13.43 per share; 100,000,000 shares of
$1.00 par value capital shares authorized;
18,406,343 shares outstanding) $ 247,282,420
For federal income tax purposes, the identified cost of investments owned at
June 30, 1995 was $146,011,242.
Net unrealized appreciation for federal income tax purposes was $99,606,960,
which is comprised of unrealized
appreciation of $100,848,686 and unrealized depreciation of $1,241,726.
*Securities on which no cash dividends were paid during the preceding year.
**Standard & Poor's rankings are derived from statistical measurements of
past earnings and dividend stability and growth.
NR - indicates no ranking is available. Rankings are not covered by the
report of independent auditors.
See accompanying Notes to Financial Statements.
<PAGE>
STATEMENT OF ASSETS
AND LIABILITIES
June 30, 1995
ASSETS:
Investment securities, at market value
(identified cost $146,011,242) $ 245,618,202
Dividends receivable 454,226
Receivable for investments sold 1,954,227
Total assets 248,026,655
LIABILITIES AND NET ASSETS:
Cash overdraft 49,472
Payable for investments purchased 694,763
Total liabilities 744,235
NET ASSETS $ 247,282,420
NET ASSETS CONSIST OF:
Capital (capital stock and paid-in capital) $ 146,659,377
Accumulated undistributed income:
Undistributed net investment income 162,016
Accumulated net realized gain on investment
transactions 854,067
Net unrealized appreciation in value of investments 99,606,960
NET ASSETS APPLICABLE TO OUTSTANDING SHARES $ 247,282,420
Capital shares, $1.00 par value
Authorized 100,000,000
Outstanding 18,406,343
NET ASSET VALUE PER SHARE $ 13.43
See accompanying Notes to Financial Statements.
<PAGE>
STATEMENT OF OPERATIONS
Year Ended June 30, 1995
INVESTMENT INCOME:
Income:
Dividends $ 5,058,891
Interest 245,967
5,304,858
Expenses:
Management fees (Note 3) 1,974,453
Registration fees and other expenses 19,305
1,993,758
Net investment income 3,311,100
REALIZED AND UNREALIZED GAIN ON INVESTMENTS (Note 1):
Realized gain from investment transactions (excluding
repurchase agreements):
Proceeds from sales of investments 52,315,944
Cost of investments sold 42,283,647
Net realized gain from investment transactions 10,032,297
Unrealized appreciation on investments:
Beginning of year 69,498,193
End of year 99,606,960
Increase in net unrealized appreciation on investments 30,108,767
Net gain on investments 40,141,064
Increase in net assets resulting from operations $ 43,452,164
See accompanying Notes to Financial Statements.
<PAGE>
STATEMENTS OF CHANGES
IN NET ASSETS
For The Two Years Ended June 30, 1995
1995 1994
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income $ 3,311,100 $ 3,713,942
Net realized gain from investment transactions 10,032,297 14,766,716
Increase (decrease) in net unrealized appreciation
on investments 30,108,767 (9,006,746)
Net increase in net assets resulting from
operations 43,452,164 9,473,912
Net equalization included in the price of shares
issued and redeemed (40,263) (50,510)
DISTRIBUTIONS TO SHAREHOLDERS FROM:*
Net investment income (3,314,210) (3,678,341)
Net realized gain from investment transactions (9,640,620) (14,376,616)
Total distributions to shareholders (12,954,830) (18,054,957)
DECREASE FROM CAPITAL SHARE TRANSACTIONS:
Proceeds from 1,301,049 and 1,082,510 shares sold 16,159,476 13,912,880
Net asset value of 909,226 and 1,407,070 shares
issued for reinvestment of distributions 12,003,961 16,798,690
28,163,437 30,711,570
Cost of 3,136,550 and 3,093,551 shares redeemed (39,062,149) (39,557,371)
Net decrease from capital share transactions (10,898,712) (8,845,801)
Total increase (decrease) in net assets 19,558,359 (17,477,356)
NET ASSETS:
Beginning of year 227,724,061 245,201,417
End of year (including undistributed net
investment income of $162,016 in 1995
and $0 in 1994) $ 247,282,420 $227,724,061
*Distributions to shareholders:
Income dividends per share $ 0.18 $ .2000
Capital gains distribution per share $ 0.5345 $ .7931
See accompanying Notes to Financial Statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES:
The Fund is registered under the Investment Company Act of 1940, as amended,
as a diversified open-end management investment company. The following is a
summary of significant accounting policies consistently followed by the Fund
in the preparation of its financial statements.
Investments - Common stocks traded on a national securities exchange are
valued at the last reported sales price on the last business day of the
period or, if no sale was reported on that date, at the average of the last
reported bid and asked prices. Common stocks traded over-the-counter are
valued at the average of the last reported bid and asked prices. Investment
transactions are recorded on the trade date. Dividend income and distributions
to shareholders are recorded on the ex-dividend dates. Realized gains and
losses from investment transactions and unrealized appreciation and
depreciation of investments are reported on the identified cost basis.
Federal and State Taxes - The Fund's policy is to comply with the requirements
of the Internal Revenue Code applicable to regulated investment companies and
to distribute all of its taxable income to its shareholders. Therefore, no
provision for federal or state tax is required.
Equalization - The Fund uses the accounting practice known as equalization,
by which a portion of the proceeds from sales and costs of redemption of
capital shares, equivalent on a per share basis to the amount of undistributed
net investment income on the date of the transactions, is credited or charged
to undistributed income. As a result, undistributed net investment income per
share is unaffected by sales or redemptions of capital shares.
2. PURCHASES AND SALES OF SECURITIES:
The aggregate amounts of security transactions during the year ended June 30,
1995 (excluding repurchase agreements), were as follows:
Purchases $ 37,990,324
Proceeds from sales 52,315,944
3. MANAGEMENT FEES:
Management fees, which include all normal expenses of the Fund other than
taxes, fees and other charges of governmental agencies for qualifying the
Fund's shares for sale, special legal fees, interest and brokerage
commissions, are paid to Jones & Babson, Inc., an affiliated company. These
fees are based on average daily net assets of the Fund at the annual rate of
.85 of one percent on net assets up to $250,000,000, and .70 of one percent
on net assets exceeding that amount. Certain officers and/or directors of the
Fund are also officers and/or directors of Jones & Babson, Inc.
4. RECLASSIFICATION OF UNDISTRIBUTED NET INVESTMENT INCOME:
During the year ended June 30, 1995, $165,127 was reclassified from capital
stock to undistributed net investment income. Net investment income and net
assets were not affected by this change.
<PAGE>
FINANCIAL HIGHLIGHTS
The following table sets forth information as to capital and income changes
for a share outstanding for each of the five years in the period ended
June 30, 1995:
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $11.78 $12.30 $11.70 $11.05 $11.18
Income from investment operations:
Net investment income 0.18 0.20 0.22 0.20 0.24
Net gains on securities
(both realized and unrealized) 2.18 0.27 1.44 0.69 0.06
Total from Investment Operations 2.36 0.47 1.66 0.89 0.30
Less distributions:
Dividends from net investment income (0.18) (0.20) (0.20) (0.20) (0.25)
Distributions from capital gains (0.53) (0.79) (0.86) (0.04) (0.18)
Total Distributions (0.71) (0.99) (1.06) (0.24) (0.43)
Net asset value, end of year $13.43 $11.78 $12.30 $11.70 $11.05
Total Return 20% 4% 14% 8% 3%
Ratios/Supplemental Data
Net assets, end of year (in millions) $ 247 $ 228 $ 245 $ 232 $ 235
Ratio of expenses to average net assets 0.85% 0.86% 0.86% 0.86% 0.86%
Ratio of net investment income to average
net assets 1.42% 1.54% 1.54% 1.69% 2.26%
Portfolio turnover rate 17% 10% 13% 12% 22%
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE>
REPORT OF INDEPENDENT
PUBLIC ACCOUNTANTS
To the Shareholders and Board of Directors of
David L. Babson Growth Fund, Inc.:
We have audited the accompanying statement of assets and liabilities,
including the statement of net assets, of David L. Babson Growth Fund, Inc.
(a Maryland corporation), as of June 30, 1995, and the related statement of
operations for the year then ended, the statements of changes in net assets
for each of the two years in the period then ended, and the financial
highlights for each of the five years in the period then ended. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements and the financial highlights. Our
procedures included confirmation of securities owned as of June 30, 1995, by
correspondence with the custodian and brokers. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement and the
financial highlights presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
the David L. Babson Growth Fund, Inc. as of June 30, 1995, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for each
of the five years in the period then ended in conformity with generally
accepted accounting principles.
ARTHUR ANDERSEN LLP
Kansas City, Missouri
August 4, 1995
<PAGE>
This report has been prepared for the information of the Shareholders of
David L. Babson Growth Fund, Inc., and is not to be construed as an offering
of the shares of the Fund. Shares of this Fund and of the other Babson Funds
are offered only by the Prospectus, a copy of which may be obtained from
Jones & Babson, Inc.
